Friday, June 19, 2020

How this recession is different from past recessions

Two articles deal with this. It is hurting women more than men. Also, the causes are different and the duration may be shorter than The Great Depression.

See Coronavirus Employment Shock Hits Women Harder Than Men: Women are more likely to work in vulnerable sectors like retailing and personal care by Sarah Chaney and Lauren Weber of The WSJ. Excerpts:
"Women usually fare better than men during an economic downturn. Not this time.

Growth in service professions has allowed women to overtake men as a proportion of the U.S. labor force. But it has also made them more vulnerable to job losses, because sectors with more women, such as education, leisure and hospitality, have been hardest hit by social-distancing measures.

In April, when the full force of the coronavirus-related lockdown struck, unemployment surged to 14.7% from 4.4%. Among women, the rate rose to 16.2%, compared with 13.5% for men, according to Labor Department data released last week. In February, before the pandemic, the rates were similar at close to 3.5%.

Job losses in April were particularly steep among industries in which women account for more than half of all workers.

Stefania Albanesi, a University of Pittsburgh professor of economics, found that women account for about 77% of workers in occupations that require close personal contact and cannot easily be done remotely, such as food preparation, health-care support and personal service.
In the past, men were more likely to be unemployed during downturns because they held a dominant share of jobs in sectors like manufacturing and construction, which typically bear the brunt of a recession. Unemployment among men reached 11.1% in 2009, compared with a peak of 9.0% for women in 2010.

“Every recession is a ‘mancession’ except this one,” Ms. Albanesi said."
See also Coronavirus Slump Is Worst Since Great Depression. Will It Be as Painful? Today’s downturn is comparable in scale to that of the 1930s, but it probably won’t be as damaging or long-lasting, economists say by Josh Zumbrun of The WSJ. Excerpts:

"“I don’t find comparing the current downturn with the Great Depression to be very helpful,” said former Federal Reserve Chairman Ben Bernanke, who has studied that 1930s era. “The expected duration is much less, and the causes are very different.”"

"“The breakdown of the financial system was a major reason for both the Great Depression and the 2007-09 recession,” Mr. Bernanke said. Today, however, “the banks are stronger and much better capitalized.”"

"Comparisons with the Depression are difficult because most of the data sets collected today didn’t exist in the 1930s. But some rough measures are available, including global trade tallies from the League of Nations, Federal Reserve data on factories and Works Progress Administration records on joblessness.

In the 1930s, industrial production fell by more than half. Production slowly made up ground for almost four years, only to decline sharply again in 1937-38."

"When the coronavirus hit, industrial production had already been dipping as a result of the recent trade wars. While many factories closed as consumer demand shrunk, some are rapidly retooling. Auto makers General Motors Co. and Ford Motor Co., for example, have switched from making cars to ventilators. Medical-supply factories are struggling to keep pace with demand.

From 1929 to 1933, the economy shrank for 43 consecutive months, according to contemporaneous estimates. Unemployment climbed to nearly 25% before slowly beginning its descent, but it remained above 10% for an entire decade."

"This time, many economists believe a rebound could begin this year or early next year if the virus is sufficiently contained.

While unemployment in the U.S. hit 14.7% in April and is likely to rise further, the blow today is softened by safety-net programs such as unemployment insurance."

"“But if we’re able to get reasonable control of the virus, the economy will substantially recover, and this downturn should be much shorter than the Great Depression, Mr. Bernanke said.”"

"“We’ve had this very abrupt, very sharp, immediate reduction in economic activity, driven by government policies to shut down economies. And because it’s very abrupt, the numbers are astronomical,” said Douglas Irwin, a professor at Dartmouth College who has studied U.S. trade policy during the Depression."

"By contrast, he said, “The way the world evolved into the Great Depression was a slow and steady decline. It was a slow strangulation of the economy.”

As in the Depression, today’s collapse is global. But the scale is smaller, Gita Gopinath, chief economist at the International Monetary Fund, said in a briefing last month. The IMF estimates the world economy shrank about 10% during the Great Depression, versus an expectation of about 3% this year and an expected return to growth next year. Advanced economies shrank about 16% in the Depression, compared with about 6% forecast for this year."


Anonymous said...

I wonder should this technically be considered a recession. It appears to be a recession simply by definition and perhaps a shrink in consumerism. Once the virus is contained, everything should go back to normal. I truly think it will be a V shaped recovery. Also, comparing to 1930 when no internet was available, things are very different when it comes to shopping nowadays. All we have to do is get on the computer and find things to buy and it shows up to our houses via trucks. Sales are being made and trucks are still rolling. The airlines may have a bit of trouble, but i'm sure if they saved cash from those overpriced tickets in the past, they will be just fine. I do hear about many businesses going under and it appalls me how many of them apparently operate at the margin.

Cyril Morong said...

Right. Businesses are not as profitable as people indicate in surveys

I think the NBER declared that a recession began in Feb. They base that on real income, employment, industrial production and sales

Certainly the technology helps keep things going